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Government makes it easier to claim R&D tax relief

The Government has launched a new plan to make it easier for small businesses investing in research and development to claim tax relief.

The two-year plan has been published in response to an HMRC consultation. It aims to increase take-up of research and development (R&D) tax relief through raising awareness amongst small businesses and making it easier for SMEs to apply.


The tax relief, which encourages companies to invest in new product development, helps reduce the amount of corporation tax firms pay on profits by offsetting them against investment in R&D.


The latest statistics for 2013/14 show that more than 15,000 SMEs claimed the relief in 2013, an increase of around 19% from the previous year, but the Government wants more SMEs to invest and benefit from the tax relief.

The plan, Making R&D Easier: HMRC's plan for small business R&D tax relief, sets out that:


  • From now on, small companies - with a turnover under £2 million and fewer than 50 employees - will be able to seek advance assurance from HMRC on R&D tax relief. This will enable them to invest in research and development with more confidence;
  • HMRC will improve its communication around R&D tax relief and will work with other government agencies to identify companies that have carried out R&D but have not claimed relief;
  • Interactive guidance will be developed with stakeholder involvement.


According to HMRC's analysis, each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment.


David Gauke, Financial Secretary to the Treasury, announced the plan at a visit to Vivobarefoot, the innovative sports shoe business, which has successfully focused on new product development and claimed R&D tax relief for five years as a result. Gauke said:

"R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013 … but we need to go further to support pioneering small businesses. That's why we've published a document setting out our plans to increase awareness and make it easier for people to apply."

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